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Understanding the Economic Consequences of Shifting Trends in Population Health

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  • Michaud, Pierre-Carl

    (HEC Montreal)

  • Goldman, Dana P.

    (RAND)

  • Lakdawalla, Darius N.

    (RAND)

  • Zheng, Yuhui

    (RAND)

  • Gailey, Adam H.

    (RAND)

Abstract

The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy ? with a concomitant decrease in the public-sector's annuity burden ? but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.

Suggested Citation

  • Michaud, Pierre-Carl & Goldman, Dana P. & Lakdawalla, Darius N. & Zheng, Yuhui & Gailey, Adam H., 2009. "Understanding the Economic Consequences of Shifting Trends in Population Health," IZA Discussion Papers 4366, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp4366
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    Cited by:

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    2. Marc Carreras & Pere Ibern & José María Inoriza, 2018. "Ageing and healthcare expenditures: Exploring the role of individual health status," Health Economics, John Wiley & Sons, Ltd., vol. 27(5), pages 865-876, May.
    3. Bhattacharya, Jay & Packalen, Mikko, 2012. "The other ex ante moral hazard in health," Journal of Health Economics, Elsevier, vol. 31(1), pages 135-146.
    4. Anthony Webb & Natalia Zhivan, 2010. "How Much Is Enough? The Distribution of Lifetime Health Care Costs," Working Papers, Center for Retirement Research at Boston College wp2010-1, Center for Retirement Research, revised Feb 2010.
    5. Bram Wouterse & Bert R. Meijboom & Johan J. Polder, 2011. "The relationship between baseline health and longitudinal costs of hospital use," Health Economics, John Wiley & Sons, Ltd., vol. 20(8), pages 985-1008, August.
    6. Yang, Muzhe & Huang, Rui, 2010. "Exposure to Obesity and Weight Gain among Adolescents," Research Reports 149944, University of Connecticut, Food Marketing Policy Center.

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    More about this item

    Keywords

    microsimulation; social security; health care costs; disability;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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